Swiss earmark CHF879 million for development banks

African schoolboy in mask — A schoolboy washes his hands in Ivory Coast on May 25, when schools re-opened Keystone

Switzerland is to contribute CHF879 million ($907 million) to help fight poverty, promote sustainable development and deal with the health, social and economic impacts of the Covid-19 crisis on the world’s poorest countries.

swissinfo.ch/ts

This money will go to the International Development Association (IDA/World Bank) and the African Development Fund (ADF), the government said in a statementExternal link on Wednesday.

How Switzerland benefits from development aid

This content was published on Mar 25, 2020 Switzerland supports development banks, which aim to boost the economies of poor countries. But aid money also ends up back in Swiss bank accounts.

“The Covid-19 crisis threatens to jeopardise the progress made in recent decades in reducing poverty and improving health and living standards in many developing countries,” it said.

“The multilateral development banks play a major role in managing crises and in combating extreme poverty. With their expertise and financial means, they are effective in addressing global challenges such as pandemics, financial crises and climate change.”

Budgets

Switzerland will commit CHF683 million to restock the IDA coffers and CHF196 million for those of the ADF. This money will be paid out over nine to ten years.

Switzerland is also contributing CHF115 million to the Multilateral Debt Relief Initiative (MDRI), continuing the support it began in 2005. Under this initiative, loans to heavily indebted countries made by the IDA and the ADF are successively written off, provided these countries introduce certain reforms.

Around three-quarters of Switzerland’s contributions has been earmarked from the existing 2017-2020 framework budget to fund technical cooperation and from the aid fund for developing counties. The remainder will be taken from the subsequent framework credit for development cooperation. This still has to be approved by parliament.

IDA and ADF

Over the next three years, the International Development Association, the arm of the World Bank set up to support the world’s poorest countries, will invest $82 billion in their development. Its aim is to promote economic growth in these countries, to increase their resilience and to improve the economic and social outlook for the poorest inhabitants. The IDA will also focus on job creation and on improving prospects locally for people in unstable countries or those suffering conflict. Helping them to mitigate and adapt to climate change is another of its key aims. In particular, the IDA will use its funds to cushion the negative impacts of the Covid-19 pandemic, investing up to $50 billion over the next 15 months.

The African Development Fund uses its funds of $7.6 billion to help, in particular, countries in unstable contexts, with a specific focus on the causes of irregular migration and refugee flows. The money goes towards improving general economic conditions, developing the private sector and promoting sustainable and inclusive growth. More than one third of the funds will be used to stop the spread of the coronavirus and manage the Covid-19 crisis and its consequences.

(Source: Federal Council)